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QE Pathology
Since I'm posting this on ZH, I'll mention - cough - check out my new site SocialTrade - cough. Thanks. Oh, and sorry about the "kook" reference below. I know most of you are the gold-is-heading-to-$4500/ounce type. Anyway....
We live in insane times. I mean this sincerely.
The reason they don't seem insane is because we have been led here, bit by bit. We are like the proverbial frogs in the pot full of water; the temperature has been turned up very gradually, and we don't notice what a dire situation we're in.
Let's just step back and look at the facts: the entire financial world is breathlessly awaiting the words of a lifelong academic who couldn't successfully manage a Burger King. The most powerful position in the financial universe has been given to The Bearded One, and while all the chatter this week is going to focus on whose Jackson Hole is going to get reamed, the real fireworks will be on September 13th.
Take a look at the chart of the OEX, and join me on the other side of it:
I draw these conclusions:
+ The area in the rounded rectangle was the real "buying opportunity" - - the kind that only comes along once a generation. People who gobbled up stocks in early 2009 obviously did the right thing, and they did so brilliantly (or at least luckily).
+ The successive rounds of "easing" that Ben has shoved down our throats (or up our aforementioned Jackson Holes) have been obviously losing steam. This isn't a matter of subjective interpretation; this is simply an arithmetic fact. QE1 powered stocks like mad; QE2 pushed them, but without nearly as much gusto; and the Operation Twist rally has been anemic (and, in the case of the small caps, inconsequential).
+ The red horizontal line marks we are now. We are a great deal lower than we were at the market's peak at 2007 - and allow me to stand on a rooftop and shout this - - this level has been provided only after trillions of dollars have been poured onto the market like so much gasoline on a fire. If this is the best that trillions of dollars of new debt can provide, how much more upside do you think QE3 is going to provide?
Let's look at the Dow 30 now:
It's a similar situation; we are mashed up against the top of a channel that has been in place for many, many years, and that is ONLY with the assistance of trillions of dollars of accommodation that Ben has provided to his banker butt buddies.
What I am waiting for - - the day I live for - - is when Ben announces his next offering of Big News and the market wilts as swiftly as a college fraternity President's peninsula of masculinity when confronted with an all-nude, life-sized color photograph of Abby Joseph Cohen. The promise of this day gives me the resolve to keep going.
Not that today was a bad day; on the contrary.....my portfolio was UP more than the market was UP, equities were higher virtually across the board (SPY/QQQ/IWM all in the green), I was ENTIRELY short, AND I had a 30% of my portfolio in cash! Give me a day that the market is up, I make more money than the market, and I'm entirely short, and I'm a happy guy. I can only imagine the results if this stinking sack of crap was allowed to fall by the King of the Juice.
To my eyes, the miners are a jumping-up-and-down, Holy Jesus Back Up the Truck kind of short. People only see the "obvious" when it's too late. Here's the Russell from back in 2007 and 2008. It was obvious to me that it was going to collapse.
........and it did..........
And afterwards everyone talked about how obvious it was. No one mentions it beforehand.
For me, looking at anything kook-oriented is even more of a screaming short. Here's the gold and silver index:
And here is the $HUI:
I am thus short the GDX and long GDX puts. I intend to amplify this position piece by piece if things continue to inch my way.
I'm 70% committed now in 93 different short positions, and although even God himself doesn't know what's going to happen this Friday, I am certainly hoping that evil, corrupt, sorry excuse for a man named Bernanke completely disappoints his co-conspirators so we can at least wait until 9/13 for the real decision point.
I bid you farewell, and I thank you for visiting my little corner of the fiscal blogosphere.
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If charts could predict prices, we would know that by now.
Speaking of turning the heat up slowly, take a look at what Sarbannes-Oxley legislation has been used to do. Besides adding crippling overhead to domestic businesses, that had to hire and train their own federal policy HR gestapo, now there are companies overseas that have compiled massive and erroneous dossiers on Americans, that are used to determine who gets to work, credit scores, etc. Hostile, at least indifferent thralls to hostile foreign dictatorships are dictating our individual futures. One guy was turned down for a job because someone with the same name is serving a 20 year prison sentence - in another state. The court's response? Tough, you're screwed for life because of your name. Sarbannes-Oxley IS global technofeudalism, expanding the intrusive social engineering that came in in the Affirmative Action trojan horse.
What Mr. Slope fails to mention is the spike in the dollar when Europe collapses. Hense, the plunge in the metals. That is the lifetime opportunity to load the wagon. The shiny is the put for the FRN, which will spike up and the shiny will plunge. Wait till the shiny knife hits the ground before you pick it up.... you'll cut yourself!
Consumer confidence tanking this morning, banks and credit card companies tightening, paypal forcing clients into debit card transactions, oil, gas, fuel oil prices pressuring consumer with unemployment persisting. Meanwhile Bernanke waiting until after elections to stimulate broken economy while Euroland flounders . Not to worry because Party conventions will offer policy platforms to resolve all our problems---- just follow the yellow brick road to disaster.
look at Zimbabwe and early stages in hyperinflation. Stock markets are in uptrends in currency debasing economy, and also Faber thinks that stocks are not the one to short. We need to understand that there is no logic anymore in markets in terms of fundamentals and no new flow of stupid newcomers to the trading game. The system is architected in a way that the money is taken and forced to be invested in stock markets. I do not think that this is shorting opportunity, and totally not for gold. Look at the patterns in gold and silver http://jessescrossroadscafe.blogspot.sk/2012/08/gold-daily-and-silver-we...
You know what's insane? I clicked on that link of Abbey Joseph Cohen to see if it really was a nude picture of her. What is wrong with me???
Seriously, you have to be careful with shorts in the new Weimar Republic. The only real short is the purchasing power of the dollar, particularly when the Rosengrens and Evans start voting in a few months.
Rounded rectangles violate APPL patents. Rounded squares - maybe not.
Otherwise - good read. If you were late you were late.
'The times DONT seem insane'? To who...the Neandersheeple?
the fundamental truth always wins.
http://expose2.wordpress.com/2011/11/20/a-voice-from-the-dark/
I hear she wears Jack Boots and wields a riding crop around the office. Maybe Goldman will start handing out photos of that once things get really desperate.
No matter what it is, there’s always someone who likes it. And Goldman doesn’t care who they are or what they’re into, as long as they will pay for it.
Re: nude Abby Joseph Cohen: gag me with a spoon. Gurf...
If only technicals mattered. We find ourselves in yet another "new" paradigm. There is no market Neo. Accept it, get physical and build wealth in the real assets and real people around you.
Moreover, ZIRP is fucking QE. Can't wait for NIRP. Tell me, do you think I can get paid to take out my next business loan?
I agree, the world will soon revert to realness. Bonds, derivatives, trading accounts....whoosh, where did they go?
Real wealth, real things are actually the only things that are real. Seems silly to type it, but Mr Knight won't get it, he's too busy trading his paper. A fool and his money are eventually parted though.
A little dramatic but you may be right about 60k. I agree with you but by then the mkt will be so upside down, bank holidays, new accounting rules.....might be more of a mess than even Ben wants to deal with. Right or wrong, they have slowed things down to a crawl, with the mkt suspended here waiting for something....they are trying to figure out how to keep gaming the system, while maintaining some degree of legitamcy. Expect new phrases like QE to be introduced as they now need to make up terms and new rules to mask the fact that the entire mkt has become a Silly Game...and the US Govt has been running a Giant Pretend Account with no real consequences for its actions. It's more of a PR problem than economic issue!
Rectangles, horizontal lines, channels: all a load of baloney.
Gold isn't going to $4,500 of course, it's going to c.$60k an ounce (in today's buying power).
Those that mock will eventually see other 'assets' for what they are really worth, but lines on a chart won't help them by then.
Correct, as the author and everyone else seems to forget, ZIRP is fucking QE. They have been printing, and it has been accelerating. Why? Becasue they really believe that there is no cost (i.e. no one actually pays any interest) for creating capital.
Unfortunately, there is a very real cost, especially when nothing of real fucking value has been created as a result.
In short, the misallocation and malinvestment of resources and capital continues and will continue until supply lines finally break and producers start defaulting on contracts to deliver real goods. Then the world switches back to a very public war (America has always been at war).
History may not repeat, but it sure as hell rythmes.
ben will never announce qe and the market wilt...the market will 'wilt' one day without notice and take everyone by suprise. ben will always get a rise because it is free risk-free money. unless ben crashes the market (aint going to happen), old benny wont have any more clue than you and i when the market goes down 1000pts in one day....and old benny cant crash the market because retail hasnt bought in...this time the big players would eat the crash and they arent going to do that on purpose.
The Ben Bernank will probably keep the market flat to up into the election. Gas is $4 a gallon so the muslim puppet will be replaced. My guess is The Ben Bernank knows he will be replaced with another puppet. The shell game rolls on. My guess is the market may tank after Romney is inaugurated. You may get a bit of a bounce from the "election."
After Dick O'Bama turns us over to a Caliphate, I hope those mooselams will buy and sell PMs to infidels:
Catholic Prayers to be dumped for Giant Mooselam Prayer-Fest in Charlotte:
http://www.theblaze.com/stories/dnc-announces-2-hour-islamic-jumah-praye...
PMs may be the best bribe to avoid decapitation.
bernaqui sent me a letter, qe starts thursday. dont tell anyone!
I think keeping the markets in check until election time affords Obama the best chance of winning.
It much easier said than done, as more QE will most certainly push core inflation past the Fed's own targeted band-- implying something beyond the Fed's stated dual mandates. That's a nasty political football so close to the elections. And if I were Romney, I'd be all over it.
No more QE will result in (a) a bad initial market reaction; and (b) a bad market follow-through, as foreign markets are going to be a huge headwind on revenues and profits over the next few quarters.
Just don't be surprised if they can extend and pretend for a few more months.
Assetman
Like your avatar. Is Timmae about to jump out that window ?
The Bernank appreciates you continuing to play his game under his terms...
The Bernank appreciates you continuing to play his game under his terms...
Yes! It is time to exit the slave system and start building your own systems.
Exit? Anyone who tries to leave will be shot for treason. The msm will make sure noone cares.
careful shorting GDX and gold....
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Flattery will get you nowhere.
Shit, flattery will get you everywhere, at least on Wall Street and in D.C.
And nothing spells flattery better than cash.